SEC Filings

several
outside investors were involved. However, the Company observed that all the buyers were existing investors and/or related parties; therefore, they may not represent an arms-length transaction.
Based on the above, the Company derived the fair value of its common stock to be $18.17 per share as of September 30, 2015.

December 31, 2015 Valuation

In order to estimate the value of the Company's common stock as of December 31, 2015 the Company determined the value under two
scenarios: (1) an IPO scenario, in which the Company contemplates an initial public offering in the near-term and (2) a dissolution scenario. The valuation was based on a recent
financing and continuing expectations for an IPO. The IPO scenario in the September 30, 2015 valuation reflected a range of total equity value based on the Class D common stock issuance,
giving full consideration to the Company's capital structure and its outlook for a liquidity event (form and timing). Given the steady progress of the Company operationally and clinically, the current
IPO scenario carries forward the implied total equity value to December 31, 2015. Adjustments were made to reflect the current capital structure and outlook for a liquidity event. The IPO
scenario and dissolution scenario are weighted based on expectations of future liquidity events and expressed as a single concluded per share value. A discount for lack of marketability (DLOM) was
applied to reflect the relative increased risk arising from the inability to readily sell the shares of a private company. Based on the above, the Company derived the fair value of its common stock to
be $19.74 per share as of December 2015.

Restricted Stock Granted to Non-Employees

In January 2014, the Company issued 2,334,391 shares of restricted common stock to a member of the Company's Board of Directors
pursuant to a consulting agreement for scientific advisory services to be performed by the director on behalf of the Company. Of these shares, 583,597 common shares were vested at the time of grant
and the remaining restricted shares are scheduled to vest in the amount of 25% per year on the second, third and fourth anniversary of the grant date. The unvested shares are subject to repurchase at
$0.00007 per share, by the Company should the advisor's consulting arrangement terminate for certain specified reasons (see Note 21).

The
unvested shares under the award are being revalued each period until they vest. Compensation expense is recorded using the Graded Vesting Attribution Method over the vesting period
of each separate vesting tranche of the award. The award had a grant date fair value of $3,535,419. The Company recorded compensation expense of $19,322,275, $5,749,791 and $0 in the years ended
December 31, 2015, 2014 and 2013, respectively, related to this award, within research and development expense in the consolidated statements of operations.